COVID-19: The Contactless Payment Catalyst,
Research from Paysafe suggests the shift in favor of contactless is likely to endure long after the restrictions tied to the pandemic have been lifted. The data shows 50% of U.S. consumers reported using contactless payment methods at least four times in May, with 69% agreeing contactless payments were more convenient than cash. In fact, many stores are encouraging customers to use contactless to reduce the virus' spread. Paysafe's research showed 60% of U.S. consumers said using contactless during the pandemic has made them more comfortable with the idea of using the payment method in the future.
When We Go Back to Eating Out, More Will Pay with Phones
People stuck at home are turning to pickup and delivery more than ever, sending digital sales at restaurants through the roof. At Chipotle, digital orders in the first three months of the year grew 81% to $372 million. For companies like Starbucks and Chipotle, mobile orders are a way to speed up the line and serve more people. Plus, people who order digitally usually spend about 20-30% more, according to Peter Saleh, restaurant analyst at BTIG. About one third of respondents to an April survey of U.S. consumers performed by fintech company FSIS and Ipsos said that they plan to use contactless or mobile wallet payments rather than cash or checks moving forward. Altogether, 45% said they are using a mobile wallet to make payments.
COVID-19 Pandemic Revealing Grocery’s Digital Future
Online grocery orders in the U.S. reached a record 62.5 million in April. That month saw 40 million customers head online to shop for groceries, and these customers are expecting their preferred chains to keep up with the shift. Grocery wholesaler and services provider UNFI typically sees between five and eight requests per month in the eCommerce space, but in April UNFI received 129 requests for eCommerce payment setups — and May was just as busy. Enabling innovative payment experiences in brick-and-mortar stores is proving important for grocers. Contactless payments or automated checkout experiences are seeing interest as the pandemic continues.
Digital Banking No Longer a Differentiator
Closures of physical branches have meant many account holders no longer have access to brick-and-mortar banking, leading to a 60% rise in mobile financial app downloads in April. PYMNTS.com’s inaugural, Digital Payments in A Digital World Playbook analyzes how recent events such as the COVID-19 pandemic have impacted consumer banking behaviors and how FIs are responding to these shifting needs. The Playbook examines which digital tools - such as mobile wallet payments, QR codes or the use of additional technologies – can help FIs fulfill these needs as well as what these developments mean for the future of banking.
MoneyGram Reports Digital Money Transfer Surge
MoneyGram International Inc. has offered more proof that the COVID-19 pandemic has prompted consumers to embrace mobile payment options. MoneyGram reports digital transactions grew by 100% year-over-year in May, and for the first quarter, MoneyGram reported a 57% increase in digital transactions. MoneyGram Online, the company’s direct-to-consumer channel, saw a volume increase of 107% in May, compared with the year-ago period. More than 80% of transactions were completed on a mobile device. Account deposit and mobile wallet transactions grew 156% in May, which compares with 80% growth during the first quarter.
FBI Warns that Digital Banking Surge Poses Cyber Threat
The Federal Bureau of Investigation has issued a public bulletin warning that mobile banking customers could face increased risk of cyber-attacks as more consumers embrace digital banking amid COVID-19. The FBI warned cyber attackers are embedding malicious apps, called banking trojans, inside third-party software like games or other tools. The banking trojan can replicate legitimate banking sites and appears to be part of the legitimate login page. The agency suggests using two-factor authentication when logging onto a mobile banking app and also to use complicated passwords, with upper and lowercase letters and symbols.
More Time for Pay-at-the-Pump Switch to EMV
At least two major card networks have agreed to give merchants who operate automatic fuel dispensers (AFDs) more time to make the switch to chip card terminals at the pump. With the AFD liability shift looming, Visa has agreed to extend the deadline by six months from October 20, 2020 to April 17, 2021. American Express has extended it until April 16, 2020. Under the liability shifts, fuel retailers, not card issuers, will be financially responsible for fraud if their automated fuel dispenser can’t read a chip card. The National Association of Convenience Stores, National Association of Truck Stop Owners, Petroleum Marketers Association of America, Society of Independent Gasoline Marketers of America and Merchant Advisory Group requested the delay, suggesting that social distancing policies and "stay at home" orders have caused shortages in personnel, delays in equipment and increased lead times to change payment terminals at pumps across the country. Pay-at-the-pump is the final category to be subject to a chip-card liability shift.
Pandemic’s Winners are Digital
Stripe Co-Founder and President John Collison tell PYMNTS.com the global coronavirus pandemic has been the catalyst for a massive shift toward digital everything. That shift is forcing companies to examine their abilities to meet their consumers, employees and business partners at these new points of interaction. Collison says this highlights the robust commerce capabilities of “digital first” platforms, such as Amazon, Uber and Instacart, which are on the front lines of powering the global economy, providing goods and services to consumers as offline businesses are locked down. If businesses have the right infrastructure in place, the disruption can offer them the chance to seize new revenue opportunities as online demand spikes. Unfortunately, countless other companies struggle to make that transition, and face challenges in expanding reach and boosting conversion rates online.
Digital Identity in the COVID-19 Era
For a post-coronavirus world, biometrics technology holds immense promise for certifying identities securely — and at a distance. While fingerprint scanning may face challenges in an era when people are afraid of touching buttons, a range of biometric innovations are emerging around the world are helping businesses and healthcare institutions tackle the effects of the COVID-19 pandemic. In China, a facial recognition software is being used to diagnose potentially infected patients on smart buses. In Japan, technology providers have improved facial recognition technology so it is effective even when consumers are wearing face masks. These advances have triggered ethical discussions about how the technology can be abused. The greatest concern is whether the U.S. government will relax protections of citizen’s data to track COVID-19’s spread.
Federal Reserve Lifts Six-withdrawal Limit on Savings Accounts
The Federal Reserve Board has announced an interim final rule to amend Regulation D, allowing consumers to make an unlimited amount of withdrawals or deposits from savings deposit accounts instead of being capped at six. This should make it easier for people to pay bills more frequently online from a savings account. While the rule doesn’t require banks to suspend the six-transaction limit, financial institutions are now able to give customers an unlimited number of transfers and withdrawals if they choose to. Bankrate chief financial analyst Greg McBride, CFA, worries about the unintended consequences of this change. “If savings accounts and money market deposit accounts start to look more like everyday transaction accounts, the interest earnings are going to start to look more like everyday transaction accounts,” McBride says.
Use of contactless mobile payments is surging as people come to see their phones as the safer way to pay. They’re also using mobile apps tied to payments to place delivery or pickup orders for groceries. A survey of 361 companies released in April by the Strawhecker Group and the Electronic Transactions Association found that 27% of U.S. small businesses have seen an increase in customers using services like Apple Pay. A couple of weeks ago, Walmart Inc. tweaked its self checkout system to go completely contactless when shoppers use Walmart Pay. Previously, you had to touch a “Pay now” button after scanning your groceries. Now, you can read a QR code with your phone to pay. Use of pickup and delivery at Walmart is growing as well.
Fraud on the Rise Amid Pandemic
More scammers are trying to take advantage of the fear and vulnerability that comes along with the COVID-19 pandemic. Officials with Enterprise Bank and Trust said there has been an uptick in several different types of fraud since the coronavirus crisis began, including check fraud, with scammers trying to forge, fake or steal checks. Email phishing scams have also been on the rise, along with business email compromise where fraudsters hack or mimic company emails and request a fake wire of funds. Scammers are getting better and better at faking links and emails to make them look like they're coming from somewhere credible, and, if you click on a link, it can infect your computer with a host of malware. They say the fraudsters are preying on vulnerability and fear. Another reason is that more people are conducting business online, which can open up more opportunities for scammers.
NYC Encourages Contactless Pay for Parking
The New York City Department of Transportation is urging residents to use contactless parking payment by smartphone to reduce risk of spread of COVID-19. Two different apps -- ParkNYC and ParkMobile are now available for download to pay for parking at 80,000 metered spots across New York City. "Contactless Pay-By-Cell reduces exposure risk for the public and our workforce," DOT Commissioner Polly Trottenberg said. "Please help us reduce the need to physically service parking meters and collect, sanitize and securely store cash during this crisis."
Synchrony Cautiously Optimistic
Despite a sharp downturn in consumer spending, the nation’s largest issuer of store cards sees reason for optimism. Synchrony, which issues branded cards on behalf of more than 100 major merchants, says it is not sitting back and is instead pursuing deals in the pipeline with merchants. They have plans to issue a card for PayPal Holdings Inc.’s Venmo peer-to-peer payment service later in 2020 and a Verizon card is on track to launch before July. Synchrony reported first-quarter purchase volume of $32 billion, which was down slightly from the year-ago quarter, but executives noted the second half of March was down 26%. The first part of April saw a year-over-year decline of 30% to 35%.
Banking Will Become ‘Digital-Always’
Fundamental shifts are underway in financial services and the way in which those services are delivered — and a report from PYMNTS.com predicts the shifts will be permanent. As social distancing takes root, a digital-first mentality will become a strategic imperative for financial institutions (FIs) and presents an opportunity for smaller banks to shine. Individuals are embracing technology more and leveraging relatively new offerings, such as remote agent assists, text chats and interactive teller machines, sometimes accessed from their cars. The pandemic is forcing FIs to reassess not only how many branches they operate, but also how activities within the physical setting can be streamlined and made relevant to tech-savvy consumers. Analytics, APIs and other advanced technologies can help FIs improve their operations and customer interactions as well as gain the confidence to innovate.
Bank Call Centers Busier Than Ever
The limits on in-branch banking due to the COVID-19 pandemic have created huge backlogs at telephone banking centers, as retail customers have struggled to complete many in-branch transactions. A story in Mobile Payments Today says many of the early calls were customers researching assistance programs, and in more recent weeks more customers are calling to utilize the relief programs. Fifth Third Bank proactively called about 1 million customers, asking them if they needed hardship assistance. Citibank set up a microsite with information about COVID-19 assistance programs, including payment deferrals, stimulus payment information and branch hours. At JPMorgan Chase, customers have used the call centers to get help with delaying payments or increasing lines of credit. A J.D. Power study found that digital banks lagged traditional banks in managing telephone banking issues. Overall, customer satisfaction with call centers fall 34 points when hold times exceed 4 minutes.
Consumers Spending Trending Down
Consumers have been forced to change their spending behavior to adapt to COVID-19. Overall credit card spending was down 30% year-over-year for the 13th week of 2020, and overall debit card spending was down 18% . That's what Payments Journal learned when it sat down with executives from PSCU and Mercator Advisory Group to look at transaction trends. Grocery stores and supermarkets saw spending growth of 25% for credit card and 10% for debit card. This indicates consumers were easing back from their “stock-up” purchases conducted during the early weeks of the COVID-19 pandemic. Spending at drug stores and pharmacies was up 0.7%, and debit card spending was down 7.5%. In the prior week, the growth rates were up 33% and 27% respectively.
USA Today Says Mobile Pay is Safest Way
USA Today's article, "Is it safe to go grocery shopping? Helpful tips during the coronavirus pandemic," suggests the safest way to pay for grocery items is through mobile pay apps on your phone, such as Apple or Google Pay. If the pin pads the grocery store don’t have a mobile pay option, then using a credit or debit card is safer than cash, since studies have found paper money can harbor thousands of microbes from various environments. Most cashiers at grocery stores and fast-food restaurants have been instructed not to handle credit or debit cards, so shoppers are required to use the pin pad. Experts recommend using hand sanitizer or washing your hands right after checkout and avoiding touching eyes, nose and mouth.
Disinfect Common Surfaces Being Touched
In the article, “Should You Disinfect Your Phone? Here’s How,” Wirecutter offers recommendations for disinfecting a phone or tablet, cautioning against spraying directly onto a device. This is good advice for those responsible for disinfecting PIN pads and ATMs as well. Dr. Sankar Swaminathan, chief of the Infectious Diseases Division at the University of Utah School of Medicines recommends consumers use hand sanitizer, or wash their hands as soon as they can to be careful when interacting with objects touched regularly by others in quick succession, such as an ATM or the PIN pad at a grocery store.